The next decade in India will be SMEs’ era, when most of the country’s large business houses will be required to ride on the back of SMEs for achieving growth, said Mr. K.V Kamath, Non-Executive Chairman, ICICI Bank & Infosys. He said he was extremely bullish about the prospects of India’s economic growth, which could be around 10% for many years to come.
Mr Kamath was delivering the inaugural address at a large meeting organized jointly by Indian Merchants Chamber and Bombay Stock Exchange at the BSE’s Convention Hall for launching the SME Exchange on February 24. He also released a booklet on MSMEs, jointly authored by Ashwin Merchant & Chaitanya Shah and published by the IMC’s Economic Research & Training Foundation.
Among other distinguished speakers to address the meeting were : Mr Lakshman Gugulothu, CEO of BSE-SME Exchange, Mr Rajeev Krishnan, President & COO of SMI Capital Markets, Mr Anurag Bansal, Director of SME Global Securities, Mr Dishyant Dave, Chairman & Managing Director of the venture capital Puneet Advisory Services, and Mr Uttam Bagri, CEO of BKB Finance which was the first company to be listed on the newly launched SME Exchange at BSE.
Mrs Deena Mehta, Chairperson of IMC’s Investment Committee, Mr Deepak Doshi, Chairman of IMC’s MSME Committee, and Mr Ashishkumar Chauhan, Deputy CEO of BSE, welcomed and felicitated the speakers.
Continuing his speech, Mr Kamath said that he had witnessed in the past 8 to 9 years during his tenure in ICICI phenomenal growth of SMEs demanding recognition from his bank. “In the first year, ICICI received only about 3,000 applications from SMEs for bank finance; but next year, the number of applications rose to 30,000, and on the third year, the number rose to 1,000,000. About 60 per cent of them were from the services sector. And their applications were backed by the Crisil ratings. Hunger for finance by the SMEs show that they are growing bigger and bigger,” he said.
He said the Government had projected the country’s GDP growth rate at between 8% and 8.5%. “But, besides this ‘recorded growth’ there is also considerable ‘unaccounted growth’, which may be around one per cent. Together, it will add up to 9.5%- 10% ,” he said.
Mr Kamath said that rural GDP in the last ten years had declined from 40% – 50% to 10%- 20%. But in the backdrop of this bleak scenario, one could not ignore the phenomenal rise of a host of small rural agriculture-based business entities — engaged in both the manufacturing and services activities — all feeding the growth momentum, creating demand for infrastructure. “If we account for this new phenomenon, I believe there is no fear of an economic slowdown,” Mr Kamath said.
Mr Kamath emphasized that SMEs needed new technologies, and modern management practices. “For these, they would first need to acquire equity capital and debt finance. Presently, not enough is being done to provide them debt finance. When approached for debt, bankers usually tell them that they lack adequate equity capital required for the purpose. The launching of the SME Exchange by BSE will help the SMEs to raise equity capital economically and to tap growth opportunities,” he said.
Mrs Deena Mehta said that success of the SME Exchange would depend on the Merchant Bankers and Market Makers, who would be required to play a crucial role for helping the growth of SME sector.
Mr Deepak Doshi said that SMEs were making a huge contribution to nation�s GDP, exports, industrial growth and employment. “With the launching of the SME Exchange by BSE, the SME sector will be able to play a predominant role in the capital market, and the SME Exchange will provide the required financial infrastructure,” he said. The SME Exchange would also provide an alternative window for raising capital economically, he said.
